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B. Venkatesh

THE following strategies are based on Thursday's trading in the derivatives segment on the NSE. The strategies are constructed to take advantage of short reversals in the futures prices. The recommendations may run counter to the primary trend. Protective stops are, hence, important to control risk. The initial stops are far away from the recommended entry price. This is function of the high volatility seen on Wednesday.

Sometimes, the futures contract may gap up or down so that the opening price is away from the recommended entry price. In such cases, traders can enter the position after the high or low of the first 5 minutes, as the case may be, is broken.

Note that options-based spread strategies will not be optimal, as the target levels are not far away from the recommended entry price.

SBI: The April futures closed at 663.50. Buy April futures contract after it trades above 672. Initiate the position with protective stop at 660. The upside target range is 687-690. Trail the stop to control the downside risk. The margin on the futures position is approximately 18 per cent of the contract value. The minimum order size is 500 units.

Satyam Computer: The April futures closed at 410. Sell April futures after it trades below 403.50. The downside target range is 398-394.

Initiate the position with protective stop at 416. Trail the stop to control the upside risk. The margin on the futures position is approximately 17 per cent of the contract value. The minimum order size is 1,200 units.

Ranbaxy Labs: The April futures closed at 1003. Buy April futures if it trades above 1002. The upside target range is 1011-1017.

Initiate the position with protective stop at 996. Trail the stop to control the downside risk. The margin on the futures position is approximately 17 per cent of the contract value. The minimum order size is 400 units.

(The opinion expressed in this column is based on technical analysis. There is risk of loss in trading.)

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